PM struggling to shore up HBOS rescue.

The Times reports that Prime Minister Gordon Brown is personally fighting to save the proposed rescue of HBOS.

HBOS lost more than £1 bln of its value Tuesday as shares fell by around 20%. The worry now is that Lloyds TSB shareholders will move to block the rescue deal on its current terms. The stockmarket is now valuing HBOS at 35% less than Lloyds is offering in its own shares, so Lloyds shareholders certainly have a case. The vote on the deal is two months away and will need a 75% approval from Lloyds TSB shareholders. Poor old Gordon, he isn’t having an easy time of it.

U.K. builder offering huge discounts on some new homes.

The Telegraph is reporting that Barratt Dvelopments have offered a huge 43% discount to buyers who take five or more flats or houses off its hands in its Yorkshire East division. The U.K. property market is in truly dire straits and the decline in prices looks like having a long ways to run. Consumer confidence relies heavily on the price of property and in coming months it is going to be shattered. The U.K. economy looks increasingly likely to be headed into recession.

UBS reportedly cutting staff and taking a(nother) writedown

Bloomberg reporting UBS will cut 1900 jobs from its investment banking operation and may also report another write down as early as tomorrow. Not good news for CHF.

Extremely quiet and dull trading following the IMM close

Okay, not everyone agree’s but I use the 15:00 EDT (20:00 GMT) close of pit trading on the Chicago IMM as my end of day point for daily data, and today post 1500, nothing happened in major pairs.

US equities did claw back a large chunk of yesterday’s losses with DJIA closing +485.29, S&P500 +58.45 and the NASDAQ Composite +98.60. Treasuries meantime cratered with yields moving sharply higher across the curve with the benchmark 10 -67.5/32 with the yld +.253%.

With that, I’ll leave for the day. Good evening all.

Tankan report expected to make sombre reading.

The latest Japanese Tankan report (Q-3) is out overnight (23:50 gmt) and is expected to make sombre reading. It is widely expected headline business sentiment will have turned negative for the first time in five years, confirming a stagnating economy. The median market forecast is calling for large manufacturers index to fall to -2 from 5, and large manufacturers outlook to fall to -3 from 4.

Trichet’s take on the state of things

In his post-European Banker of the Year comments he stated “Monetary policy stance aims to anchor inflation”, does that sound like someone who intends to join with other cb’ers in a co-ordinated rate cut?

None event but does nothing for those hoping for any rapid ECB move to ease.

U.S stocks doing nicely.

U.S. stocks are doing nicely with the dow presently up some 370 points. This is helping the greenback retain a bid tone, although it has to be said things have calmed a lot compared to the earlier frantic action.  All the same, USD/JPY is posting the days’ high of 106.25 at wrting, the Japanese unit not helped any by the raft of very soft economic data released overnight.

White House optimistic rescue plan on track.

White House spokesman Tony Fratto says the White House is optimistic the mortgage bailout plan can pass soon. The Bush administration will examine all measures to try to round up enough votes to pass the measure. They will not however support any effort to change the “core” measure, that of purchasing troubled mortgage assets from financial institutions.

Juncker concedes there is a financial crisis …

… doesn’t like excessive forex volatility. Probably eats his vegetables and loves little children and dogs.

Now we await Trichet’s positings.

EUR/USD steadying a little after precipitous drop.

EUR/USD is steadying after it’s precipitous fall earlier, presently up at 1.4080 having been rather close to 1.4000 at one stage. There is probably no one reason for the euro’s fall from grace, rather a combination of factors in play. Upfront from a fundamental standpoint will no doubt be the parlous state of euro-zone banking sector. Only today we had France, Belgium and Luxembourg combining to rescue Dexia, while the Irish government moved to introduce safeguards for its banking system. Meanwhile there’s the forlorn figure of Fortis wandering the Globe looking for a buyer for its’ ABN Amro stake.  There has also been some speculation (not really surprising given Thursdays ECB meet)that the European central bank might just be tempted to ease monetary policy given the state of the banking sector, signs of slowing growth and with inflationary pressures possibly peaking. They just might, but then again I don’t really think so.  Another more tenuous reason for the sell-off might be, that one day on, there is some increased optimism that there is the political will to get a U.S. bailout passed, although this remains to be seen. Technical considerations will have accelerated the move lower, as various notable chart levels gave out.  And certainly a huge EUR/GBP order, to sell apparently 3.5 yards of euros at the fix (said to have been a U.K. clearer), will have been a nice little spark for what transpired.